DC General Liability Insurance 2 — Questions and Answers
Question 1: The aggregate limit in a CGL policy represents:
- The maximum amount paid for claims at any single covered location
- The maximum amount paid for any single occurrence
- The deductible amount the insured pays before coverage applies
- The total maximum the insurer will pay for all covered losses during the entire policy period (Correct answer)
Correct answer: The total maximum the insurer will pay for all covered losses during the entire policy period
The aggregate limit is the ceiling on all payments made under the policy over the entire policy period, applying across all occurrences combined.
Question 2: Medical payments coverage under a CGL policy:
- Requires proof of the insured's legal liability before any payment is made
- Pays reasonable medical expenses for third-party injuries on the insured's premises without requiring proof of fault (Correct answer)
- Covers only named employees of the insured who are injured during business hours
- Has no separate sublimit and shares the per occurrence limit dollar for dollar
Correct answer: Pays reasonable medical expenses for third-party injuries on the insured's premises without requiring proof of fault
Medical payments coverage is a no-fault benefit that pays medical expenses for injured third parties without requiring the insured to be found legally liable.
Question 3: A 'claims-made' CGL policy form is triggered when:
- The bodily injury or property damage occurs during the policy period
- The insured first becomes aware of a potential claim situation
- The claim is first made against the insured during the policy period (Correct answer)
- The court enters judgment against the insured during the policy period
Correct answer: The claim is first made against the insured during the policy period
Under a claims-made form, it is the date the claim is first made against the insured—not when the injury occurred—that determines whether coverage applies.
Question 4: The retroactive date in a claims-made CGL policy:
- Is the last date by which a claim must be reported to the insurer
- Establishes the earliest date from which covered occurrences will be recognized (Correct answer)
- Is always automatically set to the very first date any insurance was purchased
- Determines when the policy's aggregate limit is reset to full value
Correct answer: Establishes the earliest date from which covered occurrences will be recognized
The retroactive date sets the historical boundary; occurrences taking place before that date are not covered, even if the claim is first made during the policy period.
Question 5: An extended reporting period (tail coverage) endorsement on a claims-made CGL policy:
- Extends the policy to cover future occurrences that happen after cancellation
- Automatically increases the per occurrence limit for an additional premium
- Converts the claims-made policy into an occurrence-based policy
- Allows the insured to report claims after the policy ends for occurrences that happened during the policy period (Correct answer)
Correct answer: Allows the insured to report claims after the policy ends for occurrences that happened during the policy period
Tail coverage gives the insured an additional window to report claims after a claims-made policy is cancelled or non-renewed, as long as the underlying occurrence took place while the policy was in force.
Question 6: The insurer's 'duty to defend' under a CGL policy means:
- The insurer pays defense costs only after the insured is found legally liable
- The insured must retain and pay for counsel before the insurer will reimburse costs
- The insurer must defend the insured against covered claims even if the allegations are groundless or fraudulent (Correct answer)
- The duty terminates automatically once the per occurrence limit has been paid out
Correct answer: The insurer must defend the insured against covered claims even if the allegations are groundless or fraudulent
The duty to defend is broader than the duty to indemnify; the insurer must provide a defense for covered claims regardless of whether the allegations will ultimately succeed.
Question 7: Fire damage to premises rented by the insured is handled under a standard CGL policy by:
- Being fully excluded as the landlord's responsibility under property law
- Being covered only under a separate commercial property policy
- Having no coverage available under any general liability policy form
- Providing coverage subject to a specific 'damage to premises rented to you' sublimit (Correct answer)
Correct answer: Providing coverage subject to a specific 'damage to premises rented to you' sublimit
CGL policies include a sublimit for fire damage to rented premises, restoring coverage for this common exposure that would otherwise be excluded under the property damage exclusions.
DC General Liability Insurance 2
The aggregate limit in a CGL policy represents: